What I am loosely calling violation #46 is this little ditty. I imagine they (salespeople) do not consider selling the highest cost investment choice (DSC mutual funds) or high fee professionally managed accounts, as being detrimental to the public........sure it is debatable, but there is one undebatable point, namely that the commissions are higher for the products chosen most often by people calling themselves "advisors", and thus the benefits of the investment will be lower, compared to other choices, and the client is simultaneously led to believe the that "advisor" has their best interests at heart. Bit of sleight of hand going on there.

That is why they (salespeople) use the word "advisor", rather than calling themselves by their license category or their actual job category........"oh well, why bother with rules when we can police ourselves"..........

(it is against IIROC rules to wrongly indicate to the public the type of business or qualifications..........I wonder how they rationalize letting commission sellers of products play the "bait and switch" game of fooling customers into the belief they are getting objective professional "advice"..............bit of a fraud there, that is indicative (to this reporter) of grossly negligent actions by this self regulator)

Psst. Get your money back from those who misrepresent themselves.......

(this is either violation #45 ......of industry rules, or I am starting to repeat myself:)

Letting the people you regulate misrepresent themselves to earn trust and money. Break or violate your own laws and principles of decency and fair dealing, in hopes of earning greater commissions. The actual practice of letting those licensed, trained and paid as commission salespeople misrepresent themselves as professional advisors. A classic game of bait and switch. see also GET YOUR MONEY BACK, another topic in this forum.

(a) Compliance with MFDA Requirements. Each Member shall ensure that any Approved Person who conducts any business on behalf of the Member executes and delivers to the Member an agreement in a form as prescribed from time to time by the Corporation agreeing, among other things, to be subject to, comply with and be bound by the By-laws and Rules.(b) Training and Supervision. Upon commencement of trading or dealing in securities for the purposes of any applicable legislation on behalf of a Member, all Approved Persons who are salespersons shall complete a training program within 90 days of such commencement and a concurrent six month supervision period in accordance with such terms and conditions as may be prescribed from time to time by the Corporation, unless he or she has completed a training program and supervision period in accordance with this Rule with another Member or was licensed or registered in the manner necessary, and is in good standing, under applicable securities legislation to trade in mutual fund securities prior to the date of this Rule becoming effective.

(i) Permitted by legislation. The securities commission in the jurisdiction in which the Approved Person carries on or proposes to carry on business specifically permits him or her to devote less than his or her full time to the business of the Member for which he or she acts on behalf of;(ii) Not prohibited. The securities commission in the jurisdiction in which the Approved Person carries on or proposes to carry on business does not prohibit an Approved Person from engaging in such gainful occupation;(iii) Member approval. The Member for which the Approved Person carries on business either as an employee or agent is aware and approves of the Approved Person engaging in such other gainful occupation;(iv) Member procedures. Such Member establishes and maintains procedures to ensure continuous service to clients and to address potential conflicts of interest;(v) Conduct unbecoming. Any such gainful occupation of the Approved Person must not be such as to bring the Corporation, its Members or the mutual fund industry into disrepute;(vi) Disclosure. Clear disclosure is provided to clients that any activities related to such other gainful occupation are not business of the Member and are not the responsibility of the Member; and(vii) Financial planning. Any Approved Person that engages in financial planning services otherwise than through or on behalf of a Member must:

(A) Regulations - provide such services through another person that is either regulated by a governmental authority or statutory agency or subject to the rules and regulations of a widely-recognized professional association;

(B) Legislation - comply with the requirements of any applicable legislation in connection with the services;

(C) Access - ensure that, subject to any applicable legislation, the Member and the Corporation have access to financial plans prepared on behalf of the clients of the Member by its Approved Persons; and

(d) Business Titles. No Approved Person shall hold him or herself out to the public in any manner including, without limitation, by the use of any business name or designation of qualifications or professional experience that deceives or misleads, or could reasonably be expected to deceive or mislead, a client or any other person as to the proficiency or qualifications of the Approved Person under the Rules or any applicable legislation.

My Dad Harold Blanes has asked me to send you the parts of the Criminal Code that ought to be respected by police and the whole regulative community, as well as any person involved at any level with investment security sales. The primary sections of the Criminal Code of Canada that I would expect every investment sales person to memorize are Sec. 361 to 363. There are various quotes throughout the CC's treatment of deception in the sale of securities that show that deceptive practices in the sale of securities is regarded as such a serious crime that the "beyond a shadow of a doubt" rule is waived, and any hint of deception is to be prosecuted.

False Pretense / Exaggeration / Questions of Fact

361.1 (1) A false pretense is a representation of a matter of fact either present or past, made by words or otherwise, that is known by the person who makes it to be false and that it is made with fraudulent intent to induce the person to whom it is made to act on it.

(2) Exaggerated commendation or depreciation of the quality of anything is not a false pretence unless it is carried to such an extent that it amounts to a fraudulent misrepresentation of fact.

False Pretence or False Statement

362. (1) Every one commits an offence who

(a) by a false pretense, whether directly or through the medium of a contract obtained by a false pretense, obtains anything in respect of which the offence of theft may be committed or causes it to be delivered to another person;

(c) knowingly makes or causes to be made, directly or indirectly, a false statement in writing with intent that it should be relied on, with respect to the financial condition or means or ability to pay of himself or herself or any person or organization that he or she is interested in or that he or she acts for, for the purpose of procuring, in any form whatever, whether for his or her benefit or the benefit of that person or organization.

Obtaining credit by fraud or false pretense [subsec. (1)(b)] … Furthermore, there is a presumption that where money was obtained by a false pretense, prima facie , there is an intent to defraud.

Obtaining Execution of Valuable Security by Fraud

363. Every one who, with intent to defraud or injure another person, by a false pretense causes or induces any person

(a) to execute, make, accept, endorse or destroy the whole or any part of a valuable security, or

(b) to write, impress or affix a name or seal on any paper or parchment in order that it may afterwards be made or converted into or used or dealt with as a valuable security,

is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years. R.S., C-34, s. 321.

We need help in getting ahold of Const. Kincaid who spoke with my Dad a couple of years ago, and who said that she would like to help him in his quest of getting his funds released from Investors Group. This RCMP officer used to work with Nesbitt Burns, and she said that she found it so corrupt that she had to leave. Ever since my Dad was talking with her, someone within the RCMP bureaucracy has been stopping Const. Kincaid from returning phone calls to my Dad. This is a serious form of obstruction of a police officer in her duties to serving the community, and we would like to get your help in reaching this woman so that we can put a stop to the kind of interference that is allowing impunity for deception in the sale of securities.

When police think that lying to clients is OK then we have a situation where a green light has been given to cheating by brokerages. This ultimately will cause a total destruction of confidence in our investment system, and this will cause investment money to flow to places that treat the criminal code as the primary regulative tool. I think that a Conservative government understands this principle. We need to also find out if there is any news on who is the current legislative sponsor of the Single National Regulator legislation, since the originating senator has retired. Would you be able to help us identify the current sponsor? If it is still in a form of limbo, is there any chance that you could become the assigned sponsor?

Attached in my summary of what the Criminal Code of Canada says on deceptive fraud as applied to the sales of securities in Canada.

This post is from INVESTMENT NEWS in the USA, but has great similarities to the bait and switch game in Canada where investment salespeople misrepresent themselves to the public as "advisors" by using legal exemption and sleight of hand. Details also posted in this flogg about the exact legal exemptions used etc.

Signatures on letters often followed by 'RIA,' implying earned designation; it's not

By Liz Skinner

October 3, 2011State examinations of investment advisers this year have found an uptick in compliance violations, especially involving registration, records, unethical business practices such as signing blank documents, inadequate supervision over trades and advertising issues such as misusing the term “RIA.”

Examinations by state securities regulators of 825 investment advisers from Jan. 1 through June 30 turned up 3,543 problems, or an average of 4.3 deficiencies per adviser, according to the North American Securities Administrators Association Inc. In 2009, investigators uncovered 1,887 deficiencies from 458 investment advisers, or 4.1 problems per adviser.

Most of the unethical business practices uncovered this year involved contract-related issues, such as altered documentation, signed blank documents and missing or nonexistent contracts, NASAA said.

Advertising deficiencies included issues with websites, correspondence and business cards, as well as advisers' calling themselves “registered investment advisers” as if it were an industry designation, said Mike Huggs, director of the Mississippi Securities Division and chair of NASAA's IA Operations Project Group, which prepared the report. The violation can occur if an adviser signs his name and includes “RIA” after it, he said.

“A firm is an RIA; a person is not an RIA,” he said. “When you sign a letter that way, it implies it is a designation that's earned, and it is not.”

The top deficiencies concerned inconsistencies and outdated information provided by investment advisers in annual disclosure documents form ADV Parts I and II, NASAA said. The most common books-and-records violations included failing to keep client suitability information, and not keeping client records and data safe.

The deficiencies uncovered by securities regulators from 45 states this year led NASAA to update its compliance guidelines recommending that advisers review their disclosure documents annually, carefully maintain records, including electronic backups, and other best practices.

“Our goal in identifying deficiencies and recommending best practices is to help investment advisers strengthen their internal compliance programs and improve the services they provide to clients,” said Jack Herstein, president of NASAA and assistant director of the Nebraska Banking and Finance Department's securities bureau.

State securities regulators are poised to take over regulatory oversight from the Securities and Exchange Commission in June 2012 of investment advisers that manage assets under $100 million. The Dodd Frank financial reform legislation boosted the size of advisers regulated by the states from today's $25 million AUM. An additional 3,200 advisers are expected to come under state jurisdiction.

David Tittsworth, executive director of the Investment Adviser Association, said the increase in compliance problems wasn't too significant from the period two years ago. He said firms appreciate any and all compliance guidance regulators offer.

“It's helpful when regulators share information with advisory firms about the types of deficiencies they are finding and what firms can do to promote more-robust compliance programs,” Mr. Tittsworth said.

Equal access to all information at all times to all investors, either big or small, would seem to be an admirable objective for a proper functioning market.

It has meant to have been that way for more than a decade in the U.S., which in August 2000 enacted Regulation FD that was designed to address the selective disclosure of information by publicly traded companies and other issuers.

According to the SEC’s web site, “Regulation FD provides that when an issuer discloses material nonpublic information to certain individuals or entities—generally, securities market professionals, such as stock analysts, or holders of the issuer’s securities who may well trade on the basis of the information—the issuer must make public disclosure of that information. In this way, the new rule aims to promote the full and fair disclosure.”

It is also a principle in Canada – though it is not always practiced.

Indeed, the lack of what’s supposed to occur was underscored in a recent letter the Canadian Investor Relations Institute wrote to the Canadian Securities Administrators. The letter by the “professional association of executives responsible for communication between public corporations, investors and the financial community,” focused on access to SEDAR Filings. SEDAR, or System for Electronic Document Analysis and Retrieval is a mandatory document filing and retrieval system for Canadian public companies that is operated by the Canadian Securities Administrators. The idea is to ensure that all the documents are accessible to improve investor awareness and promote confidence in the transparent operation of the capital markets.

But there are two SEDARs.

• The first is available to fee-paying subscribers to SEDAR-SCRIBE where the information is virtually in real time. Typically Reuters or Bloomberg provide the information to its subscribers as part of a data feed;

• the second is available on SEDAR’s web site — the next day.

“The Canadian Investor Relations Institute strongly believes that having two access levels to company filings on SEDAR is inconsistent with the intent of securities regulations to foster fair and efficient capital markets and provide all investors with equally timely, accurate information on which to base investment decisions,” said the letter, adding that objective “requires a level playing field, which is not provided under the current two-tier level of access to SEDAR filings.”

In its letter, CIRI, indicated it doesn’t want the data providers to be penalized. Instead it wants SEDAR to lift its game so that all investors are provided with the same level of near real-time access to SEDAR filings. In other words, the level of public access should be raised to that enjoyed by the subscribers to SEDAR-SCRIBE. NIRI is also aware that what it’s proposing requires some technology improvements for users to have equal access. “Given the technological advancements since SEDAR’s inception, CIRI believes that filed materials can now be made promptly available on the public SEDAR website,” it wrote.

Breach of Trust..........might apply to securities commissions (and their political ministry overseers) who ignore or knowingly sell out the public interest for money, loyalty, employment considerations or some other gain.

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Think about the securities commissions who knowingly let illegal products and advice be sold to the public......legal exemptions granted to friends without public notice or input.......finance ministers who, when notified about this, refuse to even discuss it, investment firms selling "crap", Goldman Sachs obtaining exemptive relief for investments in Canada etc., etc.........see flogg topic on exemptions for more

Negligence as applied to the system of taking advantage of people for money, whilst promising them a trusted, professional wealth management experience, or investment "advice".

I find negligence, gross negligence, or conscious wrongdoing applicable in many, many of the tricks of the financial trade, and the tricks of self regulation. The act of putting on a charade of "protection" or service to the public, while violating as many rules as legally (and beyond the boundaries of law) possible is just so obviously negligent in my opinion. I will put together some clips from our criminal code and elsewhere and let the reader decide what to do with them or if they apply. I think of securities commissions and self regulators who allow the public interest to be violated while profiting themselves or the financial industry when I look at some of the legal terms herein.

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PS. Any regulatory employees who would like to submit confidential and anonymous information that is in the public interest can send them anonymously to PUBLIC INTEREST LEAKS, Suite 309,440-10816 Macleod Trail SEWillow Park VillageCalgary, Alberta T2J 5N8

Misrepresentation is an interesting one. Consider the typical investment salesperson. Until 2009 they were licensed with the securities commissions as "salesperson", but referred to themselves as "advisor". (at least my firm did from just after 1987. They did not seem to worry about little things like misrepresentation.

Then in 2009, the word "salesperson" was conveniently erased from all securities acts, and replaced with the words, "dealing representative". Clears things up right?

"Advisor" is a separate license category which leads customers to believe something entirely different from "salesperson". Look up "fiduciary" or duty of care elsewhere in this flogg and on the net.

In one of the violations listed in this topic, the rules for use of the word "advisor" is shown, whereby salespersons get to use it by way of a legal "exemption" (permission to violate the laws to make something illegal, legal)

Anyway.......99% of those investment sellers out there DO NOT have the license, the education, nor the compensation scheme to call themselves "advisor". I maintain they do not even meet the terms and conditions set out by the exemption. (advice must be solely and incidental to their business?, meaning insignificant and a very rare occurence

Below are some legal clips to ponder, make up your own mind. Just do not believe everything you hear from your financial industry or their legal handmaidens......they just might not be telling you the truth about themselves

Some of the various violations of the public, shown in the previous posts are in my opinion fraudulent, some negligence, some gross negligence, misrepresentation etc., etc. But we in the financial industry have our own set of practices, and our own regulators, so we can get away with things that ordinary folks cannot. Wealth and power can buy so many handmaidens........

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FraudCanadian Criminal Code

380. (1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service,

(a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding ten years, where the subject-matter of the offence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars;

(I will leave it to you and your lawyers to determine when and where this criminal code violation occurs with your money.........several good examples might appear to you in the posts on this forum)

Violation of the public #43 is the act of taking the "high moral ground" and then doing immoral things with it.

Regulatory and self regulatory agencies are all paid by the investment industry, and most of the top positions are appointed by same. It lets us claim a high moral ground. It also fools other agencies into respecting and deferring to our high moral position. Thus we get away with crime which others cannot.

Below is a copy of one example of fooling the police into respecting and deferring to our high authority.

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The copy shown tells us (at that time) that the RCMP would not investigate a complaint unless it came from one of the "legitimate" industry sources. What a catch 22 this is, when self regulators place themselves on joint management committee positions within the RCMP and the RCMP foolishly let them get away with directing or helping to direct the "one case at a time" that each RCMP IMET office can carry on.

The issue involved a billion dollar fraud against the public and the suicide of the person who revealed it initially. The RCMP (and the regulators who it was initially revealed to) all turned a blind eye. (Amazing what they will do when investment people pay their salaries) (it is also another case where securities commissions gave legal exemptions to an investment firm to first violate our laws, and second, violate their clients......no wonder securities commission turned a blind eye)

This is a case of the corrupt leading the blind, and shows how naive the RCMP can actually be when it comes to recognizing and policing crime. I believe this practice may be changed by now, but those self regulators still sit in on RCMP joint management committees. The fox is not only regulating the henhouse, it is sitting inside having coffee with the police.

Further to the exemption to the law game that investment firms and self regulators play with each other.........

For those who suggest that this does not cause any public damage. Here is a document showing that "about 20" exemptions were granted to sell illegal sub prime mortgage products to Canadians. Damage was $32 billion and two or three suicides. Greater damage than 6,000,000 (six million) blue collar property crimes, each averaging $5000 according to Justice Canada estimates.

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Greater damage than the entire budget of the province of Alberta for one full year.

Greater damage than any crime in our history.

And the penalty? You tell me.

That is the damage from 20 such exemptions. What about the other several thousand? Who is keeping track? I can answer that one. Nobody. Don't believe? Just ask the three questions from the previous post to your securities commission.

(Many of the commissioners earn greater than $500,000. Part timecommissioners in Alberta earn $280,000.)

We are at violation 42 and building for those keeping track. Below some more haphazard additions to further flesh out or illustrate previous examples.

Further info regarding public violation #40, the use of "exemptive relief" to let financial friends skirt Securities Law in Canada.

Have something illegal to sell? Some bad advice to give customers? A dodgy income trust, or subprime mortgage package?

Not to fear. For a small fee payable to your local securities commission, they will give you a pass to violate the law. No public notice will be given, so you can sell you product without worry. No public consultation process either. Just you and the commission. Nice.

If you refer to another flogg topic on this site called "break the law and win. Apply for exemptive relief."at viewtopic.php?f=1&t=143

you will learn a great deal more than you wanted to know about getting permission to violate securities laws.

You might learn things like, when many, many exemptions (thousands actually) are granted, many of them include the following "reasons" in the commission paperwork, and I quote, "each of the decision makers is satisfied that the test contained in the legislation that provides the decision maker with the jurisdiction to make the decision has been met". Lawyers.

When I refer to the legislation I see mention of "if the commission is satisfied that it would not be prejudicial to the public interest"

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Three questions come to mind when I see these exemptions:

1. Where is the process, the documents, and the procedure to support the test mentioned, ""if the commission is satisfied that it would not be prejudicial to the public interest"?2. What exact public interest is served by the granting of this exemption and what private interest is served?3. Where is the public consultation process and the public notice process so that investors and consumers may be warned of legally exempt investment products or advice on the market?

I have asked several provincial ministers in charge of several securities commissions these or similar questions and so far...........zip. That should tell us a great deal about the ethics, and the professionalism of those involved. Time may bring us to investigate the legality of those involved.

Further to Violation #42, selling out the public by regulators and those they regulate:

first the new image from Canadian Securities Institute BRANCH MANAGERS COURSE HANDBOOK, dated 2000The key words highlighted on the page are "the client's interest must be given priority".

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second the image from 2011 meeting of industry "stakeholders"

Is it just me or is there a bit of a difference between the two documents shown? Did I miss a meeting somewhere or have our trusted regulators sold out the public interest to their friends the investment sellers? In secret no less, without telling a single Canadian consumer.

It strikes me as much like I would feel if I learned that the medical profession's Hippocratic Oath had been silently altered so that they could now "do a bit of harm" to their patients...........

VIOLATION #42 is where "stakeholders" (regulators and all the people who make money off the investment consumer, but NO investment consumers) get together in meetings and discuss how to sell out the public interests and make more money...............and includes a bit more beating the fiduciary horse with industry training courses contrasted to industry behaviours:

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From this text comes:

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What a damn shame to then see the various key "stakeholders" getting together to "divvy up the pie", so to speak, just ten years after this book was relevant, and finding them agreeing to the terms shown in blue below: